Volvo sets new targets, benchmarks against rivals

Reuters (Stockholm) - Volvo (VOLVb.ST), the world's number two truck maker, announced new financial targets on Thursday, benchmarking its businesses against key competitors rather than setting targets for a business cycle or the group as a whole.

Volvo, which sells trucks under the Renault, Mack, UD Trucks and Eicher brands as well as its own name, said its annual organic sales growth for the truck, bus and construction equipment operations, as well as Volvo Penta, should be equal to or exceed a weighted-average for comparable competitors.

Its annual operating margin should be ranked among the top two of its named competitors.

Its truck operations will be measured with its bus operations against Daimler (DAIGn.DE), Iveco , MAN , Navistar , Paccar , Scania (SCVb.ST) and Sinotruk . Its construction equipment business will be measured, with Volvo Penta, against rivals Brunswick , CAT , CNH, Cummins , Deere , Hitachi , Komatsu and Terex .

"Following the completion of the streamlining of the Volvo Group towards commercial vehicles and a number of acquisitions, the company now has the size and geographical footprint necessary to achieve long-term success," Chairman Louis Schweitzer said in a statement.

He said that while growth would remain important in the future, the board was of the opinion that the prerequisites were now in place to also set new profitability targets for the company and its new chief executive officer.

Volvo's previous financial targets for the group were adopted in September 2006 and comprised an annual sales increase of 10 percent and an operating margin for industrial operations of 7 percent or more.

Those targets were measured over a business cycle.

Volvo has seen sales bounce back since the global financial crisis of 2008 and 2009, but investors still wonder whether market turmoil and renewed worries about recession may yet have an impact on demand for new trucks.